1. Field of the Invention
The present invention relates to a method and a system for the electronic exchange of tax information which allows for the secured statistical study and easy access to the tax information, without compromising the confidentiality of the electronic tax information owner/taxpayer.
2. Description of the Prior Art
Tax information found on income tax returns and on other tax documents submitted to the Internal Revenue Service and other tax authorities contain a wealth of information which, if properly correlated, could provide a wealth of statistical data which could aid users of this information in more ways than simply better tax compliance. Tax information has considerable potential to shed insights and provide competitive advantages in the areas of finance, human behavior, industry, business, government, and marketing.
There are already a number of different institutions which would find value in the use of tax information. Currently, tax information is utilized by lending institutions in order to create statistical models determining the credit worthiness of a potential borrower. Lending institutions also typically require several years of tax returns from a potential borrower in order to determine the credit worthiness of a potential borrower. Businesses often take tax surveys to determine the tax impact on their profitability when selecting potential locations to build or locate its facilities. Businesses also typically use tax information to evaluate the profitability of a potential corporate acquisitions. There are many other commercial uses for tax information. However, many are not able to be implemented due to the lack of an easily accessible and statistically significant source of tax information.
Using tax information as a source of statistical data has not been used in the past due to perceived confidentiality issues and the difficulty in retrieving and organizing tax information. As a result, the IRS and the state governments are currently the only institutions which can provide tax information to the public on a large scale. However, in most instances, obtaining tax information from these entities is a long and often difficult process. Obtaining copies of tax returns from the IRS and state institutions, typically require a wait of 2 or more months. The IRS and state governments are simply not prepared or nimble enough to be the source of tax information exchange.
Furthermore, the IRS and state governments are limited in the type and amount of information they can provide to the public. In most instances tax information can only be obtained in paper form. Tax information in electronic form provides a more economical and efficient means of handling tax data. The handling of the paper income tax returns and the storage of these documents, and the manual inputting of this information into the computer applications using this information typically adds a significant cost in evaluating tax information. Furthermore, copies of tax information received in paper form are more easily doctored and made fraudulent, a very serious concern for businesses like lending institutions.
With the advent of electronic methods of filing income tax returns and with the advent of technologies which can convert the contents of a tax document into an electronic file, more and more tax information is stored in its electronic form. Most tax preparation firms, accounting firms and law firms currently maintain there own databases of tax information. However, these databases are not typically linked or shared, isolating the information stored in each individual database. Furthermore, there is no current standard format for the electronic storage of this tax information making the evaluation of this tax information from different databases quite difficult.
The aggregation of these databases into a central data repository increase the value of the tax information more so than if the tax information was marketed separately by the individual holders of the tax information. Also, greater efficiency can be achieved if the information is able to be disseminated electronically between the parties which can utilize this information.
Accordingly, there is a need for a readily available source of individual and corporate tax information with a statistically significant amount of tax information therein in order to perform accurate statistical analysis of tax information.
Accordingly, there is also a need for a readily available source of individual and corporate tax information which protects the confidentiality of the individuals and corporations which submitted tax information.
Accordingly, there is a further need for a readily available source of individual and corporate tax information which is accurate and easily accessible between interested parties.
Lastly, there is a further need for a readily available source of individual and corporate tax information in a standardized electronic form allowing for the easy integration and utilization of this information by the computer applications utilized by the interested parties.
The present invention is a method and a system for the electronic exchange of tax information which allows for the secured statistical study and easy access to the tax information, without compromising the confidentiality of the electronic tax information owner/taxpayer.
As will be described in greater detail hereinafter, the present invention solves the aforementioned and employs a number of novel features that render it highly advantageous over the prior art.
Accordingly, it is an object of my invention to provide a readily available source of individual and corporate tax information with a statistically significant amount of tax information therein, both quantitatively and qualitatively, thereby allowing for more accurate statistical analysis of tax information.
Accordingly, it is a further object of my invention to provide a readily available source of individual and corporate tax information with safeguards to protect the confidentiality of the individuals and corporations which submitted tax information.
Accordingly, it is a further object of my invention to provide a readily available source of individual and corporate tax information the contents of which are accurate and easily accessible between interested parties.
Lastly, it is a further object of my invention to provide a readily available source of individual and corporate tax information in a standardized electronic form allowing for the easy integration and utilization of this information by the computer applications utilized by the interested parties.
To achieve these objectives, and in accordance with the purposes of the present invention the following method and system for the electronic exchange of tax information is presented.
The present invention is a method and a system for the electronic exchange of tax information which allows for the secured statistical study and easy access to the tax information, without compromising the confidentiality of the electronic tax information owner/taxpayer.
Tax information kept in tax preparation firms, accounting firms and law firms are downloaded into a central data repository. The aggregation of this tax information into a central data repository increases the value of the tax information more so than if the tax information was marketed separately by the individual holders of the tax information. The central data repository acts as the aggregator and conduit of massive tax information. This tax information is then made readily accessible to the parties which are in need of this information. The dissemination of needed tax information is made quicker and more efficient due to the ability to electronically transfer this tax information to the parties which utilize this information.
A communication link is established between a first processor located at a tax preparation firm, accounting firm or law firm and a receiving processor located at the central data repository. Databases of tax return information that are in electronic form and owned by the tax preparation firms, accounting firms, and law firms are then downloaded to the central data repository.
A first copy of the electronic tax information is then made and the first copy of the electronic tax information is converted into a standard electronic document having a standard format. The standard electronic document has predefined data fields with a predefined order of data fields. The first copy of the electronic tax information is parsed in order to identify data to be placed within the predefined data fields. Data is then systematically extracted from the first copy of the electronic tax information and then placed into the appropriate data fields creating a new standard electronic document. The new standard electronic document is then sent into a first database where it is sorted and stored with the other standard electronic documents.
A first copy of the standard electronic document is then sent through a filtering process in which all the data fields containing identifiable data such as names, social security codes, identification numbers, and street address are removed creating a data mining document. The data mining document is then sent to a second database where the data mining document is sorted and stored with other data mining documents.
In order to obtain copies of the information stored within the first or second database, a request is submitted by a party for the release of tax information. Tax information is released to a third party in one of two ways. If the tax information requested requires that the identifiable data be included, such as requests for past income tax returns in order to submit to a lending institution for loan verification, an authorization from the owner of the tax information must be submitted with the request in order for the request to be carried out. The information is then searched for and copied from the first database by an output processor means.
If the tax information requested does not require identifiable data, such as requests for bulk data in order to perform data mining operations, the request will include specific criteria which the tax information must satisfy in order to be released. The output processor means then searches the second database and copies all the tax information which satisfies the criteria.
The format in which the tax information is to be delivered and the location to which the information will be delivered to is also included in the request. Once the requested tax information is gathered, the output processor initiates the delivery of this information.